Home Prices Predicted to Rise 6.3%
CoreLogic reported that home prices are expected to rise 6.3% from April 2014 to April 2015. Let’s look at an example to find out what that means in terms of dollars.
If you are buying a home for $200,000 and putting 20% down at a 4.375% interest rate your Principle & Interest payment would be $798.86 per month. If you wait one year and prices are now at $212,000 that is $846.79 per month. And that doesn’t take into account that interest rates are predicted to increase 1% over the next 18 months too. A $212,000 purchase price with 20% down now at a 5.375% interest rate would give you a P&I payment of $949.71. That is $150.85 more per month!
Remember, every 1% increase in an interest rate reduces your buying power by 11%.